SBE News



Pricing insanity: Material costs escalate, driving contractor desperation

Amid unprecedented challenges with the cost and availability of construction materials, firms locked into contracts based on last year’s prices are feeling the heat.

At conventions, on Zoom calls and in casual conversation, it’s the only thing contractors talk about anymore. Everyone wants to know how everyone else is dealing with the rapid escalation of material prices, a crisis that revved up last spring and shows no signs of slowing down for at least another year.

Lumber

“Starting in March of this year, it just became all-consuming,” said Brian Perlburg, senior counsel of construction law and contracts for Associated General Contractors of America. “It hasn’t let up. It’s become an evergreen issue.” “Contractors have the most difficult job in America today because every decision is fraught with risk and uncertainty,” said Anirban Basu, chief economist for Associated Builders and Contractors, as he predicted material costs would continue to soar well into next year. COVID-19-related disruptions devastated global production and supply chains, which continue to be ravaged, but that’s only one of many factors causing prices to spike. China’s new emissions-reducing limits on metal production, factory closures throughout Asia, a disruptive winter storm in Texas, a natural gas shortage in Europe, global transport problems and labor shortages have all contributed to skyrocketing costs — and construction firms locked into contracts based on 2020 and pre-2020 prices are feeling the heat. Construction Dive

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